Moody's Corporation revealed, in a new report, that the recent phase which Saudi had gone through, and during which it witnessed a drop in oil revenues, also showed that Saudi has the ability to overcome the crisis, in addition to maintaining the rate of exchange of the Riyal versus the US Dollar.
The balance surplus achieved by Saudi, over the 10 years previous to the drop in oil revenues, which reached a medium of 11% GDP, allowed Saudi to maintain very low levels of debt and and to collect a large reserve, which will help the country to maintain the exchange rate of the Riyal versus the Dollar.
Moody's reconfirmed that adjusting to the new conditions regarding oil prices requires brave steps to be taken by the Saudi government, in relation to management and control of spending, as well as an increase in resources.
Moody's predicts that the Saudi budget deficit will be between 12% and 15%, over the 2 coming years, and that the current account deficit will be between 8% and 12%.
Moody's clarified that Saudi's continued oil production and maintenance of its market share are among factors which have helped to sustain economic development, despite the challenges, contrary to what happened at the end of the 90s, when the economy witnessed a deflation, as a result of a reduction in oil prices and a decrease in output.
Moody's also confirmed that adapting to the new reality in oil prices requires courageous steps from the Saudi Government in connection with the management and control of spending and an increase in resources.
Moody's predicted continued development of the Saudi economy during this year, even if it is at a slow pace, predicting a 1.5% increase in the rate of economic development in 2016.